Prosser et al v. XTO Energy, Inc.
Filing
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ORDER granting 10 Defendant's Motion for Joinder of Required Parties and denying 14 Plaintiffs' Motion to Dismiss its first claim of relief and for Leave to Amend their Motion for Summary Judgment. Signed by Judge Gregory L Frost on 4/25/13. (sem1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
MARK A. PROSSER, et al.,
Case No. 2:12-cv-0883
JUDGE GREGORY L. FROST
Magistrate Judge Kemp
Plaintiffs,
v.
XTO ENERGY, INC.,
Defendant.
OPINION AND ORDER
This matter is before the Court on the following filings:
1.
Defendant’s motion for joinder of indispensable parties or for dismissal in the
event such parties cannot be joined (ECF No. 10); and
2.
Plaintiffs’ motion to voluntarily dismiss their first claim for relief and for leave to
amend their motion for summary judgment (ECF No. 14),1 Defendant’s memorandum in
opposition to Plaintiffs’ motion (ECF No. 17), and Plaintiffs’ reply in support of their motion
(ECF No. 22).
For the reasons more fully set forth below, the Court DENIES Plaintiffs’ motion (ECF
No. 14) and GRANTS Defendant’s motion (ECF No. 10.)
I.
Background
This case arises out of an alleged breach of an oil and gas lease. In August 2012,
Plaintiffs Mark A. Prosser and Greta L. Prosser filed a two-count complaint in the Belmont
County (Ohio) Court of Common Pleas seeking (1) a declaratory judgment that they own the
entire fee simple interest in certain property located in Union Township, Belmont County, Ohio
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The Court will address Plaintiffs’ motion for summary judgment (ECF No. 12) in a separate Opinion
and Order.
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and (2) specific performance of an oil and gas lease they entered into with Defendant XTO
Energy, Inc. (“XTO”). (Compl., ECF No. 3.) Plaintiffs allege that XTO is in breach of the oil
and gas lease and that XTO owes them $80,751.63. (Id. at && 14-18.) XTO timely removed the
case to this Court in September 2012, invoking federal diversity jurisdiction. 28 U.S.C. ' 1332.
The allegations in the Complaint reveal a potential cloud upon title that is at the center of
the parties’ dispute in the motions now before the Court. Plaintiffs allege that their predecessors
in title—Anne Marie Hurchot, John P. Korunych, Miro Korunych, Mike Korunych, Jr., and Nick
Korunych—each owned a “one-fifth interest” in the subject property by virtue of a deed
conveyed and recorded in November 1982. (Compl. & 5, ECF No. 3.) Plaintiffs further allege
that John P. Korunych, Miro Korunych, Mike Korunych, Jr., and Nick Korunych thereafter
conveyed to Hurchot their “undivided four-sixths interest in” the relevant lands. (Id. at & 6,
PAGEID# 40.) Armed with a legal opinion from attorney John Costine attached to their
Complaint, Plaintiffs contend that the “four-sixths” language was “merely a scrivener’s error”
and that Hurchot actually received a four-fifths interest in the relevant lands, which would mean
that Hurchot owned the entire fee simple interest in the property when she conveyed it to
Plaintiffs. (Id. at & 8, PAGEID# 39-40.) Costine’s affidavit acknowledges that Costine did not
prepare the deed containing the “four-sixths” language, but does not state that Costine acted as
an agent of the Korunyches in preparing the affidavit. (ECF No. 3 at PAGEID# 51.) Like the
deed itself, Costine’s affidavit is recorded with the Belmont County Recorder’s Office.
Defendant filed a motion to require joinder of required parties under Fed. R. Civ. P. 19(a)
or, alternatively, for dismissal of Plaintiffs’ Complaint under Fed. R. Civ. P. 19(b) if such parties
cannot be joined. (ECF No. 10.) In light of the “four-sixths” language in the conveyance to
Hurchot, XTO raises the possibility that Plaintiffs do not have valid fee simple title in the lands
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at issue. XTO contends that the legal opinion noting that the “four-sixths” language was a
“scrivener’s error” is not dispositive. Only by joining the absent parties who may claim an
interest in the subject property can the Court establish whether that language was a scrivener’s
error. (Id. at PAGEID# 129-30.)
Plaintiffs did not file a memorandum in opposition to XTO’s motion. Instead, Plaintiffs
filed their own motion, styled as a “Motion to Dismiss its [sic] First Claim for Relief.” (ECF No.
14.) Plaintiffs’ motion asks the Court to dismiss the declaratory judgment claim alleged in the
Complaint and to proceed solely on count two, seeking specific performance of the oil and gas
lease with XTO. (Id. at PAGEID# 150.) Because the indispensable parties issue, according to
Plaintiffs, is related solely to the declaratory judgment count alleged in the Complaint, Plaintiffs
argue that the Court should deny XTO’s motion if Plaintiffs are allowed to dismiss count one.
(Id.)
II.
Discussion
A. Plaintiffs’ Motion to Dismiss under Fed. R. Civ. P. 41(a)(2)
Believing that dismissing their first claim for relief (declaratory judgment as to Plaintiffs’
interest in the subject property) will moot XTO’s motion to join required parties under Fed. R.
Civ. P. 19, Plaintiffs purport to invoke Fed. R. Civ. P. 41(a)(2) to voluntarily dismiss that claim.
Plaintiffs cannot, however, utilize the voluntary dismissal rule in this manner. Litigants cannot
use Rule 41(a) to dismiss anything less than the entire action. See Letherer v. Alger Group,
L.L.C., 328 F.3d 262, 265-66 (6th Cir. 2003), recognized as overruled on other grounds in
Blackburn v. Oaktree Capital Mgmt., LLC, 511 F.3d 633, 636 (6th Cir. 2008); see also Terry v.
City of Columbus, No. 2:06-cv-720, 2008 U.S. Dist. LEXIS 52519, at *10 (S.D. Ohio July 1,
2008); Rivers v. Bowers, No. 2:06-cv-712, 2008 U.S. Dist. LEXIS 39558, at *26 (S.D. Ohio May
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15, 2008). If Plaintiffs seek to dismiss the first claim for relief, they must use another procedural
vehicle to do so (e.g., Fed. R. Civ. P. 15).
Moreover, it is worth noting that the premise underlying Plaintiffs’ motion to dismiss
appears to be incorrect. XTO argues in opposition to Plaintiffs’ motion that the absent parties
are “required” within the meaning of Fed. R. Civ. P. 19 even if the second claim for relief
(specific performance) was the only one before the Court in this action. (ECF No. 17 at
PAGEID# 168.) Though the Court need not decide the question at this time, the Court notes that
the Paid Up Oil and Gas Lease at issue in this case appears to support XTO’s argument in that
regard. The lease provides that XTO was to pay Plaintiffs royalties according to their respective
interests in the property. (ECF No. 3, at PAGEID# 52 & 3.) The lease also indicates that XTO
could withhold lease payments if there was a title dispute or question as to title over the subject
property. (Id. at PAGEID# 53 & 4 and PAGEID# 60 & g.) Thus, specific performance of the
lease would require a determination of the Plaintiffs’ interest in the subject property.
The Court DENIES Plaintiffs’ motion to dismiss their first claim for relief.
B. Defendant XTO’s Motion for Joinder of Required Parties
XTO’s motion for joinder of required parties is rooted in the admitted discrepancy in
Plaintiffs’ chain of title. As alleged in the Complaint, John P. Korunych, Miro Korunych, Mike
Korunych, Jr., and Nick Korunych transferred to Ann Marie Hurchot, Plaintiffs’ predecessor in
title, an “undivided four-sixths interests” in the subject property. (Compl. & 6, ECF No. 3.)
Plaintiffs contend, however, that the Korunych transferors held a combined four-fifths interest in
the property and that the “four-sixths” language was merely a scrivener’s error. (Id. at & 7.)
Plaintiffs rely upon the Costine affidavit, recorded in the Belmont County Recorder’s Office, in
which Costine opined that the “four-sixths” reference was a “scrivener error” and that it was
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“clear” that the purpose of the deed conveyed to Hurchot in 1983 “was to transfer the entire
interest held from the four Korunyeh [sic] brothers to their sister after they had received title
from their mother.” (ECF No. 3 at PAGEID# 51.) Based on the “scrivener’s error” premise,
Costine opined that Hurchot held the entire fee simple interest in the subject property “and that
the subsequent transfers from [Hurchot] served to transfer the entire interest” in the property.
(Id.)
Regardless of the Costine affidavit, XTO argues that the absent parties (i.e., the
Korunych brothers who transferred their interest to Hurchot) must be joined in this action, as
they are “required” within the meaning of Fed. R. Civ. P. 19(a). Rule 19(a) provides:
(1) Required Party. A person who is subject to service of process and whose
joinder will not deprive the court of subject-matter jurisdiction must be joined as a
party if:
(A) in that person’s absence, the court cannot accord complete relief among
existing parties; or
(B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the
interest; or
(ii) leave an existing party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of the interest.
In this case, XTO argues that the absent parties are required under both Fed. R. Civ. P.
19(a)(1)(A) and (B). Insofar as the Costine affidavit does not indicate that he was an agent of the
absent parties, it cannot be conclusive on the issue of whether the “four-sixths” language was a
scrivener’s error. XTO argues that joinder of the absent parties is necessary to resolve the
question of whether Hurchot obtained the entire fee simple interest in the subject property and,
by extension, whether Plaintiffs own the entire fee simple interest.
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Assessing whether joinder is proper under Fed. R. Civ. P. 19 is a three-step process.
Glancy v. Taubman Ctrs., Inc., 373 F.3d 656, 666 (6th Cir. 2004). First, the court must
determine whether the person is a necessary party under Fed. R. Civ. P. 19(a). Id. (citing Temple
v. Synthes Corp., 498 U.S. 5, 8, 112 L. Ed. 2d 263, 111 S. Ct. 315 (1990)). Second, if the person
is a necessary party, the court must then decide if joinder of that person will deprive the court of
subject matter jurisdiction. Id. Third, if joinder is not feasible because it will eliminate the
court’s ability to hear the case (e.g., if joinder would destroy the court’s diversity jurisdiction),
the court must analyze the factors set forth in Fed. R. Civ. P. 19(b) to determine whether it
“should ‘in equity and good conscience’ dismiss the case because the absentee is indispensable.”
Id. An absent party is “indispensable” within the meaning of Fed. R. Civ. P. 19, if (1) the
absentee is necessary, (2) the absentee’s joinder cannot be effectuated, and (3) the court deems it
necessary to dismiss the case rather than proceed without the absentee. Id. (citing 4 Moore’s
Federal Practice § 19.02[3][c], at 19-22).2
Under Rule 19(a)(1)(A), a party must be joined in the action if the court cannot afford
complete relief among the existing parties. According to XTO, joinder of the absent parties is
necessary because, without them, there can be no determination of Plaintiffs’ ownership interest
in the property as against XTO. (Def.’s Mot., ECF No. 10 at PAGEID# 129.) XTO also
contends that the absent parties are required under Fed. R. Civ. P. 19(a)(1)(B). This rule
provides that a party is required if “that person claims an interest relating to the subject of the
2
Though the Sixth Circuit in Glancy used the terms “indispensable” and “necessary” in its Rule 19
analysis, other courts have noted that the 1966 amendment to the Rule was designed to deemphasize, if
not eliminate, such labels. For example, the Fifth Circuit colorfully, if not confusingly, explained:
“[Current] Rule 19 is designed to ameliorate the catechistic distinction between ‘necessary’ and
‘indispensable’ parties, which had sometimes subordinated logic and reality to historical encrustations.
Under the present rule pragmaticals are to be the solvents of joinder problems, replacing former rigid
terminological descriptions of parties. We are not to be pinioned by categorical imperatives. Instead, the
effect of the parties and on the litigation process is to be the fulcrum of decision.” Broussard v. Columbia
Gulf Transmission Co., 398 F.2d 885, 888 (5th Cir. 1968).
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action.” It is not necessary that the party presently claim an interest in the subject matter of the
litigation. If the absent party could claim an interest, that is enough to fall within Rule
19(a)(1)(B). See PaineWebber, Inc. v. Cohen, 276 F.3d 197, 201 (6th Cir. 2001). And when that
interest leaves an existing party subject to a substantial risk of multiple or inconsistent
obligations, Rule 19 deems the absent party a required party that must be joined.
Regardless of whether this Court invokes Rule 19(a)(1)(A) or (B), XTO’s point is well
taken. Plaintiffs in this case ask for a declaratory judgment that they own the entire fee simple
interest in the subject property. But without joinder of the parties whose deed conveyance in
1983 is the source of the title discrepancy in this case, there can be no such determination. By
adjudicating this case without parties who may have interest in the subject property, this Court
does nothing more than place a further cloud on title. McShan v. Sherrill, 283 F.2d 462, 463 (9th
Cir. 1960). As the McShan court explained, it is “improper” for the Court to put such a cloud on
title:
A decree so affecting the interests of persons not joined as parties is improper. As
was said in Stewart v. United States, 5 Cir., 1957, 242 F.2d 49, 51: ‘No decree can
be entered affecting the title to property or cancelling any cloud thereon unless all
of the parties interested in the title or in the particular cloud and who will be
directly affected by any judgment that may be rendered are properly before the
Court.’
Id. at 463-64; see also Marra v. Burgdorf Realtors, Inc., 726 F. Supp. 1000, 1004 (E.D. Pa.
1989) (finding nominal owner of property who may have had interest in the property to be a
party who must be joined); Broussard, 398 F.2d at 887-88 (finding owner of undivided one-sixth
interest in subject property to be a required party to the suit; affirming dismissal when the party
could not be joined).
In this case, Plaintiffs want this Court to declare them to be the fee simple owners and to
award them the remaining proceeds owed them under the terms of the oil and gas lease. For the
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Court to do that without joining the absent parties would conceivably run the risk of subjecting
XTO to multiple and conflicting obligations. For example, suppose that the four Korunych
brothers really did convey only “four-sixths” of the interest in the property to Hurchot. This
would mean, arguably, that the Korunych brothers retained some interest in the property that
may entitle them to a share of the proceeds generated from the oil and gas lease. So even if this
Court were to enter judgment in favor of Plaintiffs, such a determination would not preclude the
Korunych brothers from pursuing their own lawsuit for their share of the proceeds, thereby
exposing XTO to the risk of multiple obligations and conflicting judgments. Thus, the preferred
course is to have the absent parties joined such that the Court can grant complete relief in an
action where all the parties with conceivable interests in the subject property are joined.
To be sure, Plaintiffs take umbrage at the position that the absent parties must be joined.
Plaintiffs make much of the fact that XTO “takes no position with respect to whether the issue in
Plaintiffs’ chain of title is a ‘scrivener’s error,’ or ultimately, the extent of Plaintiffs’ ownership
interest in the property.” (Def.’s Mot., ECF No. 10, at PAGEID# 124; Pls.’ Mot., ECF No. 14 at
PAGEID# 149.) Because XTO takes “no position” on the issue of ownership of the subject
property or on whether the discrepancy in the 1983 conveyance was a scrivener’s error, Plaintiffs
call those issues “undisputed” and that Plaintiffs must therefore be deemed the sole fee simple
owners of the subject property. But Plaintiffs put the cart well before the horse with this
argument. The fact that XTO does not take a position on the issue is far from dispositive of the
question. Indeed, part of the reason Fed. R. Civ. P. 19 exists in the first place is because of the
recognition that absent parties may need to have their rights protected and not left to the whims
of plaintiffs who may not want to join them in the lawsuit. 4 Moore’s Federal Practice '
19.02[1] (3d Ed. 2012). The fact that XTO itself takes “no position” on the absent parties’
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ownership interest (if any) is of no moment: the important fact is that XTO is seeking joinder of
the very parties who may assert an ownership interest in the subject party, consistent with what
Fed. R. Civ. P. 19 contemplates. While Plaintiffs are adamant that these absent parties have no
actual ownership interest in the property, the better course is for that issue to be determined with
those absent parties present, at least in a case like this one where there is an evident discrepancy
on the face of the deeds to the relevant property.
The affidavit from attorney Costine does not undercut XTO’s argument that the absent
parties should be joined. As XTO points out, nothing in the affidavit suggests that Costine was
speaking as the attorney or agent of the absent parties. The affidavit reads as simply Costine’s
“legal opinion” that the “four-sixths” language in the 1983 deed conveyance was a scrivener’s
error. Plaintiffs are essentially asking this Court to take Costine’s opinion as the dispositive
trump card to Fed. R. Civ. P. 19. But Plaintiffs cannot sidestep the rule so easily. While
Costine’s opinion might ultimately prove to be correct, that is a matter that must be litigated with
the absent parties present.
The Court finds XTO’s motion well taken. The Court GRANTS XTO’s motion for
joinder of required parties.
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III.
Conclusion
For the reasons set forth above, the Court GRANTS Defendant XTO’s motion for joinder
of required parties (ECF No. 10). Within 21 days from the date of this Opinion and Order,
Plaintiffs shall file an amended complaint joining as parties to this action the absent parties
identified herein. If such parties cannot be joined, Defendant XTO may file a motion to dismiss
this action under Fed. R. Civ. P. 19(b).
The Court DENIES Plaintiffs’ motion to dismiss its first claim for relief and for leave to
amend Plaintiffs’ motion for summary judgment (ECF No. 14).
IT IS SO ORDERED.
/s/ Gregory L. Frost
GREGORY L. FROST
UNITED STATES DISTRICT JUDGE
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